When regulators allow payers to disregard workers’ compensation laws and regulations with impunity, providers cannot help but view the system as rigged against them and the injured workers they treat.

In any state governed by laws and regulations, it is reasonable to expect consistent enforcement. But there’s reasonable, and then there’s California workers’ comp.

We just handed the Division of Workers’ Compensation (DWC) our final batch of Audit Complaints against Sedgwick for e-bills submitted in 2023, featuring 11,100 new violations in November and December. The data we presented demonstrate Sedgwick’s overall non-compliance rate increased in 2023 compared with 2022, further exemplifying systemic dysfunction — and the urgent need for action by the DWC.

Sedgwick’s violations aren’t benign failures to comply with regulatory minutiae. Their non-compliance costs providers time, money, and hassle, making it more challenging to treat injured workers.

The DWC (and the thousands of daisyNews readers) knows about Sedgwick’s long-standing, consistent failure to comply; daisyBill has sent the DWC a mountain of evidence proving it. And each month, we plead with the DWC to use its authority to impose appropriate consequences and deter continued misbehavior.

Unfortunately, the data also prove the DWC has yet to exercise its regulatory power, demonstrating to all stakeholders that laws and regulations are optional — at least for Sedgwick.

Sedgwick & DWC Owe Providers Better

Sedgwick continues to violate one of California's most basic requirements of mandatory e-bill acceptance: claims administrators must respond to e-bills with electronic Explanations of Review (e-EORs).

As repeated ad nauseam in the digital pages of this blog, e-EORs are essential because they automatically post payment details to e-bills, saving countless hours of work by staff who — per the DWC’s regulations — should no longer have to post payment information manually.

e-EORs make workers’ comp billing exponentially easier, less time-consuming, and less costly; these e-EORs are also mandatory, according to the DWC regulations.

But for the last two months of 2023, Sedgwick has yet to return e-EORs for 11,100 compliant e-bills. For November and December, respectively, that’s a 20% and 19% non-compliance rate with this critical, reasonable requirement.

Worse, the 4th-quarter numbers bring Segwick’s total 2023 non-compliance rate to 20%, compared to an overall 18% non-compliance rate in 2022. The data below demonstrate that Sedgwick e-EOR compliance has worsened in 2023.

Sedgwick doesn’t follow the rules because, if history indicates, Sedgwick doesn’t need to. And Sedgwick doesn’t need to because the DWC has shown little or no will to enforce the DWC regulations.

We’ve fed the DWC several cargo ships’ worth of hard evidence documenting Sedgwick’s abuses, publicly shamed Sedgwick and the DWC itself, and submitted enough Audit Complaints to fill an Olympic-sized swimming pool — all to no apparent effect.

We continue to beg the DWC to assume its regulatory responsibilities. If not, where does its lack of enforcement leave providers? Where does it leave injured workers? Presumably, the DWC abdication leaves Sedgwick cheering.

More importantly, how long will California workers’ comp providers flounder without a reasonable guarantee of regulatory compliance?

Continue reading to see our latest message to the DWC.

Audit Complaint

To: XXXXXXXX@dir.ca.gov

Subject: Sedgwick EDI Non-compliance: X12 835 Missing - Count 11,100

Below is an Audit Complaint reporting credible data that Sedgwick Claims Management Services, Inc. failed to send 11,100 electronic EORs (X12 835) to daisyBill providers as mandated by California law.

This Audit Complaint data represents California workers’ comp e-bills submitted to Sedgwick by daisyBill providers from November 1, 2023 through December 31, 2023.

Since June 22, 2022, daisyBill has filed 169,053 Audit Complaints with the Audit Unit to report Sedgwick for failing to adhere to California EDI regulations.

The 2022 and 2023 data in the tables below demonstrate that Sedgwick’s 2023 EDI compliance has decreased compared to 2022 EDI compliance data.

Faced with evidence of over 169,000 compliance breach complaints filed by daisyBill, the DWC continues to fail to enforce California workers’ compensation regulations to the detriment of the providers who treat injured workers.

A provider's receipt of an electronic EOR (X12 835) is a critical component of electronic billing for the following three reasons:

1. The electronic EOR closes the payment loop for a workers’ comp e-bill and
2. Automatically posts to the respective e-bill, thereby significantly reducing a provider's administrative burden of manually recording payment information to the respective e-bill and
3. Allows the gathering of essential payment data about the claims administrator hidden in the paper EORs mailed to individual providers.

I’ve attached a CSV list containing 11,100 e-bills providers submitted where Sedgwick failed to return a mandated electronic EOR to the provider. The attached CSV list includes the following columns:

• Column L: [Bill] Transmission Date
• Column W: EOR (835) Compliance Due Date
• Column X: 835 EOR: Receipt Date - This column is BLANK because Sedgwick failed to send the provider an electronic EOR (835).
• Column AO: Patient Name
• Column AP: Claim Number

Audit Complaint Details

This Audit Complaint Data submitted to the DWC represents a credible complaint and credible information on claims handling violations. Per Title 8, California Code of Regulations section 10111.2(b)(10),(11), Sedgwick should be subject to audit penalties.

EDI Non-compliance: Claims administrator failed to send an electronic Explanation of Review (EOR) in the mandated ASC X12N/005010X221A1 (835) format, despite the claims administrator sending a 277 Acknowledgement accepting the Original Bill / Second Review Appeal.

DWC Rule 7.1 requires the claims administrator to electronically send an EOR to the provider using the X12 835 EDI standard within 15 working days of receipt of an e-bill.

Per California DWC Medical Billing and Payment Guide 7.2, any electronically submitted bill determined to be completed, not paid, or objected to within the 15 working day period shall be subject to audit penalties per Title 8, California Code of Regulations section 10111.2(b)(10),(11).

We can’t make Sedgwick play fair, but we can make treating injured workers easier, faster, and less costly. Request a free demonstration below.

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